Sales tax “penalty” for state’s farmers & ranchers vanishes

A sales tax exemption is now in effect in Nebraska on repair and replacement parts for farm machinery and equipment.

The Nebraska Farm Bureau worked with the Unicameral in getting legislation passed that removed that tax burden on farmers and ranchers. Jay Rempe, the bureau’s vice president of government relations, says the savings will bring much-needed benefits to the state and local economies.

“The savings are projected to be about $9 to 10-million statewide with a couple of other benefits,” Rempe says. “Obviously, equipment dealers along the borders with our bordering states that didn’t have the sales tax, it should help them in terms of the business they see.”

The law change became effective when the calendar page flipped to October on Wednesday. Rempe says farm machinery has been exempt from sales tax for years, but Nebraska is one of eight states that has collected sales tax on repairs and parts.

“It really put our dealers and our farmers and ranchers at a competitive disadvantage,” he says. “We worked for many years alongside equipment dealers and others to try and remove this sales tax exemption and finally got the legislature to agree it was a wise policy decision and got it passed this spring.”

Rempe says many producers will use their saved dollars to improve their farmsteads.

“Farmers, when they see tax savings, they typically plow those dollars back into their operations,” he says. “New equipment or new technologies or other ways of improving their productivity. That benefits rural Nebraska as well. We see those dollars reverberating through the local economies like that.”

Rempe says Nebraska was one of only eight states that had that tax and none of Nebraska’s neighboring states collected it.

Senator Annette Dubas of Fullerton introduced LB-96 last winter. The legislature passed it in March and Governor Dave Heineman signed it into law in April.